Barack Obama warns economic recovery will take years

President Barack Obama on Friday warned that economic recovery in the United
States "will be measured in years, not months" as he scored a
major victory in his young presidency with the approval in Congress of a
$787 billion (£542) bill to revive the economy.

Barack Obama has warned this is not a 'run-of-the-mill recession'Photo: AP

By Alex Spillius in Washington

8:12PM GMT 13 Feb 2009

The House of Representatives approved a revised version but with no Republicans support. It passed in the senate in late in the evening with 60 votes, the minimum required to stop dissenters from talking the bill out off the agenda. Only a handful of moderate Republicans sided with the president and his Democratic Party.

The American Recovery and Reinvestment Act is the largest spending plan the US has ever seen. It combines tax cuts (38 per cent of the package), aid to struggling state governments (38 per cent) and central government spending (24 per cent) and aims to revive the world's biggest economy that lost nearly 600,000 jobs last month.

The president has warned that without strong intervention, the US was heading for an irreversible downward spiral, but at the same time has seen the crisis as an opening.

"We have a once in a generation chance to act boldly, turn adversity into opportunity, and use this crisis as a chance to transform our economy for the 21st century," he said, speaking to the Business Council a few hours before the vote.

He added that the bill was "only the beginning of what we must do to turn our economy around", as advisers began sketching a bold legislative agenda for the next 12 months that will include a detailed plan for struggling home owners and an overhaul of regulatory regime of the financial market.

Mr Obama will also propose a budget to lay the groundwork for sweeping health care reform and present a major green energy bill.

In the meantime Timothy Geithner, the Treasury Secretary, will present a more detailed version of his banking bail-out plans, which were heavily criticised earlier in the week for lacking substance.

The weakness of Republican support for the stimulus package was a blow to the president, who lobbied his opponents hard to present a unified front on a measure he saw as critical to the national wellbeing.

Encouraging bipartisanship and "improving the tone" in Washington was central to his political philosophy, but aides now say the bruising experience of the past few weeks will make it much less of a priority.

Rahm Emanuel, the president's chief of staff admitted to reporters that the administration had overdone its overtures to Republicans, which included two gatherings with alcohol at the White House.

"There's an insatiable appetite for the notion of bipartisanship here and we allowed that to get ahead of ourselves," he said.

From now on, the president would be civil to Republicans but has learnt there is little point expending energy on those with unwilling to compromise, either because of irreconcilable ideological differences or political calculations.

Mr Emanuel said of the president in the future: "He has an open hand, but he has a very firm handshake."

Mr Obama will continue to travel the country selling the next phases in his plans to turn America around, after he stayed in Washington for the first two weeks and lost the war in the media, which concentrated on the failure of bipartisanship rather than the content of the bill.

This week he embarked on a campaign-style stops at various trouble-spots on the economic landscape, and was at ease taking questions from members of the public. Staffers has said that he will continue to escape Washington as often as possible to explain his mission on the ground.